Certainly, there is a need to say more. This customer left out many important details of what really happened.
He never directly asked us for a refund in the first place. Instead filed a transaction dispute through the payment processor after our first response in which we briefly described the status and the terms of the shipment.
AmForward acts as an agent and arranges transportation based on customers' choice of a carrier and shipping method. Our job is done when a shipment is successfully handed to the carrier. In this case, we have done exactly as the customer asked us to do.
If the carrier fails, for example, loses shipment, AmForward will try to help the customer to get any reimbursement from the carrier on the customer's behalf if the shipment is insured or guaranteed by the carrier. We have done this for customers in numerous cases.
This customer asked us to ship his package through the least expensive USPS First-Class Package International Service where we warn our customers during the selection process on our website to avoid it for any valuable or time-sensitive shipments because that particular shipping method is an economy method where USPS does not provide any guarantees whatsoever.
Presumably, he chose the least-safe shipping method (First-Class Package International Service) with the leat-reliable shipping carrier (USPS) to ship "a one-of-a-kind irreplaceable item" that he declared as having a value of $6.
When the shipment was (possibly) lost by USPS (at the time of writing the USPS tracking still states IN TRANSIT TO DESTINATION), the customer, knowing that he used the non-guaranteed shipping method that was not eligible for any refund from or coverage by the carrier, chose to use the payment dispute process to demand a refund for funds that he was not legitimately entitled to (like the processing costs for services that AmForward has performed to receive, store and consolidate the shipment). Effectively, he used the PayPal dispute process as his backup insurance that he never paid for.
Because the customer almost exclusively used the same non-guaranteed insecure shipping method for the vast majority of his shipments, the same type of problem would most likely reoccur in the future as well. For that reason, AmForward (not PayPal) made the choice to refund the disputed transaction without actually disputing it, and limit its future risk exposure by ending the business relationship with the customer.